ABSTRACT
George Stigler invited Ronald Coase to Chicago in 1959 to give a speech at a workshop that he organized. Coase accepted the invitation. After the workshop, Coase asked the learned audience of Chicago to hold a special meeting to discuss his approach to the ‘rationale of property rights’ which the Chicagoans thought was an error and Coase should delete from his 1959 article, ‘The Federal Communications Commission’. The meeting was arranged. Eminent scholars of Chicago gathered at the residence of Aaron Director, the founder of the Journal of Economics and Law. Milton Friedman, Arnold Harberger and John McGee were at the meeting. ‘How could such a fine economist like Coase think’, his fellows at Chicago wondered, ‘that there were costs involved in the operation of price mechanism in the market?’ The discussion took about two hours. It was during this meeting that Coase convinced his Chicago colleagues of his argument. And so was it possible for the next generation of economists to know ‘probably the most widely cited article in the whole of the modern economic literature’. ‘I persuaded these economists that I was right,’ reported Coase in his autobiographical ‘Nobel Prize Speech’ in 1991, ‘and I was asked to write up my argument for publication in the Journal of Law and Economics … Had it not been for the fact that these economists at the University of Chicago thought that I had made an error in my article on “The Federal Communications Commission”, it is probable that “The Problem of Social Cost [1960]” would never have been written’ (Coase 1997, 10, see also Stigler 1988, 75–80).
